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PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #0318/01 1010107
ZNR UUUUU ZZH
P 100107Z APR 08 ZDK
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 9487
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0747
RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 15 PHNOM PENH 000318 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/MLS DORSEY 
STATE FOR EEB/IFD/OIA 
STATE PASS USTR FOR BISBEE 
COMMERCE FOR HP PHO 
 
E.O. 12958: N/A 
TAGS: EINV OPIC USTR KTDB CB
SUBJECT: INVESTMENT CLIMATE STATEMENT FOR CAMBODIA 
 
REF: 07 STATE 158802 
 
PHNOM PENH 00000318  001.4 OF 015 
 
 
¶1.  Cambodia, a developing country, began the transformation from a 
command economy to the free market in the late 1980s.  It is now 
integrating into the regional and world trading framework.  In 1998, 
Cambodia joined the Association of Southeast Asian Nations (ASEAN) 
and in September 2004, became a member of the World Trade 
Organization (WTO).  It has shown interest in participating in other 
international trading arrangements, including the Asia-Pacific 
Economic Cooperation forum (APEC). 
 
¶2.  As part of its WTO commitment to strengthen the investment 
climate for both foreign and domestic businesses, Cambodia committed 
to enact 46 new laws or regulations to address areas where existing 
law did not meet WTO requirements.  Cambodia has been behind 
schedule in fulfilling its WTO commitments to pass necessary 
business legislation.  However the country has made progress 
recently, passing several significant laws in 2007 including a 
Customs Law, Law on Water Resources Management, Law on Land Traffic, 
Law on Insolvency, and Secured Transactions Law.  The government has 
either completed drafts of most of the required laws or is waiting 
for their approval by the legislature.  According to the Economic 
Institute of Cambodia, an independent think tank, in 2007 the 
government promulgated an additional six of the 21 remaining laws 
required by WTO accession. 
 
¶3.  Since the re-establishment of a constitutional monarchy in 1993, 
the economy has grown steadily, except for a period between mid-1997 
and late 1998 when Cambodia suffered political instability and the 
Asian financial crisis affected business ativity.  The economy 
began to rebound in late 1998 with the establishment of a new 
coalition government. 
 
¶4.  Real GDP averaged 8.4 percent growth during the 1994-2006 
period. Despite dire predictions surrounding the expiration of the 
Multi-Fiber Agreement on January 1, 2005, through which Cambodia 
obtained limited duty-free access to the American market for 
garments, the economy grew at 13.4 percent in 2005 -- the highest 
rate in a decade -- and in 2006 expanded by 10.4 percent.  During 
the same period, per capita GDP grew from $440 to $513.  Success in 
garment and tourism sectors and good weather for agriculture 
generated the high growth.  For 2007, the growth rate decreased 
slightly to an estimated 9.6 percent, mainly due to the slower 
growth of the garment and agriculture sectors, and per capita GDP 
was $590. 
 
¶5.  Inflation increased sharply in 2007, as it did in many countries 
throughout Asia.  According to the National Institute of Statistics, 
in January 2008 the year-on-year inflation rate reached 18.7 
percent.  The rising price of fuel, depreciation of the dollar, and 
dramatic increase food prices continued to fuel inflation in the 
first quarter of 2008.  Apart from the composite consumer price 
index, land prices continue to reach record levels, with the price 
of residential property in Phnom Penh increasing by more than 100% 
in 2007. 
 
¶6.  Foreign Direct Investment (FDI) approved by the Council for the 
Development of Cambodia (CDC), Cambodia's investment approval body, 
has dramatically increased in recent years, with approved proposals 
reaching $871 million during the first nine months of 2007, compared 
with $201 million in all of 2004.  The CDC does not have a 
functional mechanism to monitor implementation of projects, so it is 
not clear how many of these proposed projects will be fully 
implemented.  However the increase in investor interest may be 
attributed to increased political and macroeconomic stability, and 
ongoing government reforms designed to integrate Cambodia into the 
regional and global marketplace.  Corruption has been singled out as 
one of the most serious deterrents to further private investment. 
Given inadequate private investment and poor revenue collection, 
Cambodia remains dependent largely on foreign donor funding for 
budget assistance, capital expenditure, and social services. 
 
¶7.  Since early 1999, the Cambodian government has intensified its 
economic reform program, a process the international financial 
institutions and donors encourage, participate in, and monitor 
closely.  In recent years the government has publicly committed 
itself on numerous occasions to fighting corruption, pursuing good 
governance, and increasing transparency and predictability.  This 
strategy is set out in the government's latest public reform effort 
called the "Rectangular Strategy for Growth, Employment, Equity, and 
Efficiency." 
 
¶8.  The government has initiated specific measures to promote 
business, especially small and medium-sized businesses, by reducing 
 
PHNOM PENH 00000318  002.5 OF 015 
 
 
costs and the time required for business registration and by 
establishing a number of committees for trade facilitation and 
business promotion. 
 
¶A. Openness to Foreign Investment 
 
¶9.  Cambodia's 1994 Law on Investment established an open and 
liberal foreign investment regime.  All sectors of the economy are 
open to foreign investment and 100% foreign ownership is permitted 
in most sectors.  Article 44 of the Constitution provides that only 
Cambodian citizens and legal entities have the right to own land. 
Aside from this, there is little or no discrimination against 
foreign investors either at the time of initial investment or after 
investment.  However, some foreign businesses have reported that 
they are at a disadvantage vis-a-vis Cambodian or other foreign 
rivals, who engage in acts of corruption or tax evasion, or take 
advantage of Cambodia's poorly enforced legal regulations. 
 
¶10.  In addition, there are a few sectors that are open to foreign 
investors subject to conditions, local equity participation or prior 
authorization from relevant authorities.  These sectors include 
manufacture of cigarettes, movie production, rice milling, 
exploitation of gemstones, publishing and printing, radio and 
television, manufacturing wood and stone carvings, and silk weaving. 
 The government has issued a sub-decree restricting foreign 
ownership of hospitals and clinics and forbidding the employment of 
non-Cambodian doctors in any specialty in which the Ministry of 
Health considers there to be an adequate number of Cambodian 
practitioners. 
 
¶11.  Under a sub-decree dated September 2005, Cambodia prohibits 
certain investment activities, including investment in production or 
processing of psychotropic and narcotic substances, poisonous 
chemicals, agricultural pesticide/insecticides, and other goods that 
use chemical substances that affect public health and the 
environment.  Processing and production of electric power by using 
waste imported from foreign countries are prohibited, as is forestry 
exploitation. 
 
¶12.  The privatization of state enterprises and transactions 
involving state property has not always been carried out in a 
transparent manner.  In several instances, the public learned that 
enterprises were for sale or swap only after the government 
announced a sale or deal to a particular buyer. 
 
¶13.  Investor rights (investment guarantees) provided for in the Law 
on Investment include: 
 
--Foreign investors shall not be treated in a discriminatory manner 
by reason of being a foreign entity, except in respect to land 
ownership as provided for in the Constitution of the Kingdom of 
Cambodia. 
 
--The Royal Government of Cambodia shall not undertake a 
nationalization policy that adversely affects the private property 
of investors. 
 
--The Royal Government of Cambodia shall not fix the price of 
products or fees for services. 
 
--The Royal Government of Cambodia, in accordance with relevant laws 
and regulations, shall permit investors to purchase foreign 
currencies through the banking system and to remit abroad those 
currencies as payments for imports, repayments on loans, payments of 
royalties and management fees, profit remittances and repatriation 
of capital. 
 
¶B. Conversion and Transfer Policies 
 
¶14.  There are no restrictions on the conversion of capital for 
investors.  The Foreign Exchange Law allows the National Bank of 
Cambodia (the central bank) to implement exchange controls in the 
event of a crisis; the law does not define what would constitute a 
crisis.  The U.S. Embassy is not aware of any cases in which 
investors have encountered obstacles in converting local to foreign 
currency or in sending capital out of the country. 
 
¶15.  The U.S. dollar is widely used and circulated in the economy. 
The 2007 exchange rate was stable, although slightly depreciated 
compared to 2006.  At the end of 2007, the exchange rate was $1 = 
4,003 riel.  The government is committed to maintaining exchange 
rate stability. 
 
¶C. Expropriation and Compensation 
 
PHNOM PENH 00000318  003.4 OF 015 
 
 
 
¶16.  Article 44 of the Cambodian Constitution, which restricts land 
ownership to Cambodian nationals, also states that "the (state's) 
right to confiscate properties from any person shall be exercised 
only in the public interest as provided for under the law and shall 
require fair and just compensation in advance."  Article 58 states 
that "the control and use of state properties shall be determined by 
law."  The Law on Investment provides that "the Royal Government of 
Cambodia shall not undertake a nationalization policy which 
adversely affects the private property of investors." 
 
¶17.  In spite of various legal protections, protection of immovable 
property rights is complicated by the fact that most property 
holders do not have legal documentation of their ownership rights. 
Numerous cases have been reported of influential individuals or 
groups acquiring property through means note entirely in keeping 
with the constitution or laws.  These actions are usually directed 
at poor people unable to protect their rights.  According to press 
reports, authorities in Phnom Penh carried out 29 mass evictions 
affecting more than 7,900 families between 2004 and 2007.  If 
granted at all, compensation in these cases has been less than the 
market value of the property being taken. 
 
¶18.  The Ministry of Economy and Finance is drafting a law on 
expropriation which will set broad guidelines on land-taking 
procedures for public interest purposes and define public interest 
activities such as construction of infrastructure projects, 
development of buildings for national protection and civil security, 
construction of facilities for research and exploitation of natural 
resources, and construction of oil pipeline and gas networks. 
 
¶19.  To date, there are no known investment disputes involving 
government expropriation of property belonging to U.S. citizens.  Up 
to 17 Thai businesses sustained varying degrees of damage during 
anti-Thai rioting in Phnom Penh on January 29, 2003.  The Cambodian 
government pledged to compensate Thai business owners, and the 
majority of claims have been resolved. 
 
¶D. Dispute Settlement 
 
¶20.  Cambodia's legal system is a mosaic of pre-1975 statutes 
modeled on French law, communist-era legislation dating from 
1979-1991, statutes put in place by the UN Transitional Authority in 
Cambodia (UNTAC) during the period 1991-93, and legislation passed 
by the Royal Government of Cambodia since 1993. 
 
¶21.  Cambodian culture and its legal system have traditionally 
favored negotiation and conciliation over adversarial conflict and 
adjudication.  Thus, compromise solutions are the norm, even in 
cases where the law clearly favors one party in a dispute.  In civil 
cases, courts will often try conciliation before proceeding with a 
trial.  The Ministry of Commerce is currently working on draft 
legislation to create a Commercial Court by 2009 that will likely 
include a pre-trial mediation component. 
 
¶22.  Cambodia's court system is generally seen as non-transparent 
and subject to outside influence.  Judges, who have been trained 
either for a short period in Cambodia or under other systems of law, 
have little access to published Cambodian statutes.  Judges can be 
inexperienced and courts are often understaffed with little 
experience, particularly in adjudicating commercial disputes.  The 
local and foreign business community reports frequent problems with 
inconsistent judicial rulings as well as outright corruption. 
 
¶23.  The Cambodian judiciary system is beginning to undergo reform. 
To provide the necessary background knowledge, judges and court 
staff from around the country are being trained by the Royal School 
for Judges and Prosecutors, which was created in 2002 and is the 
only school of its kind.  In an effort to clean up the court system, 
the Prime Minister has announced anti-corruption measures, including 
the dismissal, replacement, and transfer of judges and prosecutors. 
 
¶24.  To handle specific disputes with regard to labor, the Ministry 
of Labor and Vocational Training established an Arbitration Council 
in May 2003.  Basing its decision on the provisions of the Labor 
Law, the Council has 30 arbitrators.  The Council is an independent 
body whose function is to resolve collective labor disputes that the 
Ministry is unable to solve by conciliation.  The Council's 
decisions are non-binding but it has been very successful in 
reducing the number of industrial actions in the garment sector. 
The Council plays a vital role in contributing to the development of 
healthy industrial relations in Cambodia.  The Council's success in 
the garment industry has prompted unions in other sectors, e.g., the 
hospitality and tourism sectors, to seek the Council's arbitration 
 
PHNOM PENH 00000318  004.4 OF 015 
 
 
and mediation services. 
 
¶25.  Under the 2006 Law on Commercial Arbitration, a National 
Arbitration Center (NAC) will be established in the Ministry of 
Commerce.  When active, parties involved in a commercial dispute 
that have a written arbitration agreement will be able to settle 
commercial disputes in a quasi-judicial way without involvement of 
the Cambodian courts.  Parties will be able to select arbitrators 
without direct government interference.  The law also allows the 
Chamber of Commerce to establish its own arbitration center for 
disputes between members or between members and third parties. 
Neither of these proposed arbitration centers has been established 
to date.  The Law on Commercial Arbitration also mandates 
recognition of arbitral awards made outside of Cambodia. 
Arbitration awards can be appealed to the Appellate and Supreme 
Court of Cambodia based on limited grounds. 
 
¶26.  Although party to the Convention for the Settlement of 
Investment Disputes between States and Nationals of Other States, 
Cambodia has not yet had any cases taken to the International Center 
for the Settlement of Investment Disputes. 
 
¶E. Performance Requirements and Incentives 
 
¶27.  The Council for the Development of Cambodia (CDC), Cambodia's 
foreign investment approval body, administers a package of 
investment incentives.  The CDC was created as a one-stop shop to 
facilitate foreign direct investment. 
 
¶28.  Seeking to increase government revenue, the international 
financial institutions recommended that the Cambodian government 
scale back its investment incentives.  Consequently, the Cambodian 
government amended the Law on Investment in 2003.  The law creates 
regimes for profit (20%), salary (5 to 20%), withholding (4 to 15%), 
value-added (10%) and excise taxes (rates vary). 
 
¶29.  The amendments to the Law on Investment eliminated the special 
nine percent corporate tax rate for all new investments. 
Investments approved prior to the amendment to the Law on Investment 
were entitled to the special nine percent rate for a transitional 
period of not more than five years.  After this five-year period 
expires in 2008, such investments will also be subject to the 
standard 20 percent rate.  The amendments brought to an end the 
tax-free reinvestment of profits and the rights to tax-free 
repatriation of earnings and other incomes by approved enterprises. 
While some incentives have been eliminated, the law also provides a 
simplified, more transparent, and faster mechanism for investment 
approval 
 
¶30.  Under the amended Law on Investment, the profit tax exemption 
is allocated automatically on the basis of activity and minimum 
investment amounts as set out in the sub-decree.  To maintain the 
incentives under the law, qualified investment projects (QIP) are 
required to obtain an annual Certificate of Compliance from the CDC 
and file this with the annual tax return. 
 
¶31.  The amended Law on Investment includes the following 
provisions, which include the exemption, in whole or in part, of 
customs duties and taxes, for QIPs: 
 
--An exemption from the tax on profit imposed under the Law on 
Taxation for a set period.  The tax exemption period is composed of 
a trigger period + three years + n years (n to be determined 
according to the Financial Management Law depending on the economic 
sector).  The maximum allowable trigger period is to be the first 
year of profit or three years after the QIP earns its first revenue, 
whichever is sooner. 
 
--100% exemption from import duties for construction material, 
production equipment and production input materials for export QIPs 
and supporting industry QIPs in accordance with the provisions of 
sub-decree. 
 
--Transfer of incentives by merger or acquisition. 
 
--Renewable land leases of up to 99 years on concession land for 
agricultural purposes and land ownership permitted to join ventures 
with over 50% equity owned by Cambodians. 
 
--No price controls on goods produced or services rendered by 
investors. 
 
--No discrimination between foreign and local investors. 
 
 
PHNOM PENH 00000318  005.4 OF 015 
 
 
--100% exemption from export tax or duty, except for activities 
specifically mentioned in the Law in Customs. 
 
--Employment of foreign expatriates where no qualified Cambodians 
are available.  QIPs are entitled to obtain visas and work permits. 
 
--A QIP that is located in a designated special economic zone (SEZ) 
is entitled to the same incentives and privileges as other QIPs as 
stipulated in the law. 
 
¶32.  The September 2005 sub-decree on the Implementation of the 
Amendment to the Law on Investment also details investment 
activities that are not eligible for incentives, although investment 
is permitted.  They include the following sectors: retail, 
wholesale, and duty-free stores; entertainment (including 
restaurants, bars, nightclubs, massage parlors, and casinos); 
tourism service providers; currency and financial services; press 
and media related activities; professional services; and production 
and processing of tobacco and wood products. 
 
¶33.  Incentives are also not eligible for production of certain 
products with an investment of less than $500,000 such as food and 
beverages; textiles, garment and footwear; and plastic, rubber, and 
paper products.  Investors are encouraged to refer to the sub-decree 
for details of other investment activities that are not eligible for 
incentives. 
 
¶34.  Investment activities that are eligible for customs duty 
exemption, but not eligible for the profit tax exemption, are 
telecommunication basic services; exploration of gas and oil, 
including supply bases for gas and oil activities; and mining. 
 
¶35.  Cambodia has agreed to allow foreign lawyers to supply legal 
services with regard to foreign law and international law.  It also 
agreed to allow them to supply certain legal services with regard to 
Cambodian law in "commercial association" with Cambodian law firms. 
Cambodia's WTO General Agreement on Trade in Services (GATS) 
commitment defines "commercial association" as any type of 
commercial arrangement, without any requirement as to corporate 
form.  Thus, there are no equity limitations on the practice of 
foreign and international law by foreign enterprises and there are 
no equity limitations on the formation of "commercial associations" 
under which foreigners may practice certain legal services with 
regard to Cambodian law. 
 
¶36.  Investors who wish to take advantage of investment incentives 
must submit an application to the Cambodian Investment Board (CIB), 
the division of the CDC charged with reviewing investment 
applications.  Investors not wishing to apply for investment 
incentives, or who are ineligible, may establish their company 
simply by registering corporate documents with the Department of 
Legal Affairs of the Ministry of Commerce.  Once an investor's 
application is submitted, the CDC will issue to the applicant either 
a Conditional Registration Certificate or a Letter of Non-Compliance 
within three workdays.  The Conditional Registration Certificate 
will set out the terms, such as approvals, authorization, 
clearances, permits or registrations required.  If the CDC fails to 
issue the Conditional Registration Certificate or Letter of 
Non-Compliance within three workdays, then the Conditional 
Registration Certificate will be considered approved. 
 
¶37.  The CDC has the responsibility to obtain all of the licenses 
from relevant government agencies on behalf of the applicants.  The 
relevant government agencies must issue the required documents no 
later than 28 workdays from the date of the Conditional Registration 
Certificate.  At the end of the 28 days, the CDC will issue a Final 
Registration Certificate. 
 
¶38.  The Sub-decree on the Implementation of the Amendment of the 
Law on Investment adopted on September 27, 2005 does not require 
investors to place a deposit guaranteeing their investment except in 
cases in which the deposit is required in the concession contract. 
Investors who wish to apply are required to pay an application fee 
of seven million riel (approx. $1,750) representing the 
administration fees for securing the approvals, authorizations, 
licenses, or registrations from all relevant ministries and entities 
including stamp duty. 
 
¶F. Right to Private Ownership and Establishment 
 
¶39.  There are no limits on the rights of foreign and domestic 
entities to establish and own business enterprises or to compete 
with public enterprises.  However, the Constitution provides that 
only Cambodian citizens or legal entities have the right to own 
 
PHNOM PENH 00000318  006.5 OF 015 
 
 
land.  A legal entity is considered to be Cambodian when at least 
51% of its shares are owned by Cambodian citizen(s) or by Cambodian 
legal entities.  Investment incentives vary depending on the nature 
of the investment project. 
 
¶40.  Under the 2001 Land Law, foreign investors may secure control 
over land through concession, a long-term lease, or renewable 
short-term lease.  If investors intend to take a long-term lease 
interest in land or ownership interest through a 51% Cambodian 
company, it is essential that caution be exercised to ensure that 
clear and unencumbered ownership of the land is verified. 
 
¶41.  The Land Law establishes a comprehensive legal framework for 
long-term leasing.  The leaseholder has a contractual interest in 
the land, which means the lease can be sold or transferred through 
succession and can be pledged as security in order to raise 
financing.  It is also important to make sure that the land 
ownership is clearly and legally established before entering into 
any leasing agreement. 
 
¶42.  Qualified investors approved by the Council for the Development 
of Cambodia have the right to own buildings built on leased 
property.   However the law is unclear as to whether buildings from 
qualified projects can be transferred between foreigners or whether 
foreigners can own buildings built through projects not approved by 
the CDC. 
 
¶G. Protection of Property Rights 
 
¶43.  Cambodia has adopted legislation concerning the protection of 
property rights, including the Land Law and the Law on Copyrights 
and Patent and Industrial Design.  Cambodia is a member of the World 
Intellectual Property Organization (WIPO) and the Paris Convention 
for the Protection of Industrial Property. 
 
¶44.  Chattel and real property: The 2001 Land Law provides a 
framework for real property security and a system for recording 
titles and ownership.  Land titles issued prior to the end of the 
Khmer Rouge regime in 1979 are not recognized due to the severe 
dislocations that occurred during the Khmer Rouge period.  The 
government is making efforts to accelerate the issuance of land 
titles, but in practice, the titling system is cumbersome, 
expensive, and subject to corruption.  The majority of property 
owners lack documentation proving ownership.  Even where title 
records exist, recognition of legal title to land has been a problem 
in some court cases where judges have sought additional proof of 
ownership.  Although foreigners are constitutionally forbidden to 
own land, the 2001 law allows them a long or short-term lease. 
Foreigners may also legally transfer ownership of buildings and 
improvements on the land that they lease.  By law, foreign investors 
are allowed to own buildings on the long-term land lease.  Cambodia 
has yet to establish the means by which such ownerships can be 
registered. 
 
¶45.  Intellectual property rights (IPR): As a WTO member, Cambodia's 
IPR regime is in compliance with its WTO commitments; however, 
comprehensive enforcement remains problematic.  The 1996 
U.S.-Cambodia Trade Agreement contained a broad range of IPR 
protections, but given Cambodia's very limited experience with IPR, 
the WTO agreement granted phase-in periods for the Cambodian 
government to fully implement IPR protections.  On November 9, 2005, 
the WTO granted a deadline extension until 2013 for Cambodia and 
other least developed countries to enforce copyright laws and begin 
accepting patents. 
 
¶46.  Trademarks:  The Cambodian National Assembly approved the Law 
Concerning Marks, Trade Names and Acts of Unfair Competition to 
comply with Cambodia's WTO obligations under the Agreement on 
Trade-Related Aspects of Intellectual Property Rights (TRIPS). 
Signed in February 2002, the law outlines specific penalties for 
trademark violations, including jail sentences and fines for 
counterfeiting registered marks.  It also contains detailed 
procedures for registering trademarks, invalidation and removal, 
licensing of marks, and infringement and remedies. 
 
¶47.  Despite lacking clear legal authority to conduct enforcement 
activities, the Ministry of Commerce has taken effective action 
against trademark infringement in several cases since 1998.  The 
Ministry has ordered local firms to stop using well-known U.S. 
marks, including Pizza Hut, McDonalds, Nike, Scotties, Marlboro, and 
Pringles.  In 2007, the Ministry of Commerce solved 32 cases of 
trademark disputes. 
 
¶48.  Since 1991, the Ministry of Commerce has maintained an 
 
PHNOM PENH 00000318  007.2 OF 015 
 
 
effective trademark registration system, registering more than 
30,000 trademarks (over 5,500 for U.S. companies) under the terms of 
a 1991 sub-decree, and has proven cooperative in preventing 
unauthorized individuals from registering U.S. trademarks in 
Cambodia. 
 
¶49.  Copyrights:  Copyrights are governed by the Law on Copyrights 
and Related Rights, which was enacted in January 2003. 
Responsibility for copyrights is split between the Ministry of 
Culture and Fine Arts, which handles phonograms, CDs, and other 
recordings, and the Ministry of Information, which deals with 
printed materials.  Before the adoption of the law, there were no 
provisions for enforcement of copyrights. 
 
¶50.  Although Cambodia is not a major center for the production and 
export of pirated CDs, videos, and other copyrighted materials, they 
are widely available in Cambodian markets.  Pirated computer 
programs, VCDs, and music CDs are widely used throughout the 
country. 
 
¶51.  To protect and manage their economic rights, authors and 
related rights holders are allowed by law to establish a collective 
management organization (CMO).  The creation of the CMO requires 
authorization from either the Ministry of Culture and Fine Arts or 
the Ministry of Information, depending on the nature of their work. 
The Ministry of Culture and Fine Arts hopes to draft a sub-decree on 
collective management in 2008. 
 
¶52.  Patents and industrial designs: Cambodia has a very small 
industrial base, and infringement on patents and industrial designs 
is not yet commercially significant.  With assistance from WIPO, the 
Ministry of Industry, Mines, and Energy (MIME) prepared a 
comprehensive law on the protection of patents and industrial 
designs which went into force in January 2003.  The law provides for 
the filing, registration, and protection of patents, utility model 
certificates and industrial designs.  The MIME has also issued a 
sub-decree on granting patents and registering industrial designs. 
 
¶53.  Encrypted satellite signals, semiconductor layout designs, and 
trade secrets: The Ministry of Commerce is preparing a draft law for 
trade secrets while the Ministry of Industry, Mines, and Energy is 
drafting a law on integrated circuit protection.  Cambodia has not 
yet made significant progress toward enacting required legislation 
on encrypted satellite signals, although it obtained a model law on 
encrypted satellite signals and semiconductor layout designs from 
WIPO in March 1999.  Cambodia has committed to the WTO to promulgate 
a law by 2009. 
 
¶54.  IPR enforcement:  With the exception of the trademark 
enforcement actions described above, the Cambodian government has 
taken few significant actions to enforce its IPR obligations.  One 
of the few such actions was a police raid in October 2007 on a local 
market where police seized 15 illegally copied books about the 
Angkor era and the Khmer Rouge.  However, in January 2008, at the 
annual conference of the Ministry of Culture and Fine Arts, the 
government suggested it would increase prosecutions for copyright 
violations on domestically produced products before expanding 
prosecutions for foreign products.  Cambodian copyright law allows 
IPR owners to file a complaint with the authorities to take action. 
Law enforcement action taken at the request of owners is directed 
only against the piracy of domestically produced music or video 
products, but not against piracy of foreign optical media.  The 
owners requesting crackdowns must pay support costs to the 
authorities for conducting the operation.  Crackdowns on such IPR 
violations are not conducted on a consistent basis. 
 
¶55.  Infringements of IPR are pervasive, ranging from software, 
compact discs, and music, to photocopied books and the sale of 
counterfeit products, including cigarettes, alcohol, and 
pharmaceuticals.  Authors and local producers, particularly of 
optical media, frequently complain of the pervasive piracy. 
 
¶56.  The Ministry of Commerce has plans to put in place measures to 
stop IPR-violated products at borders, as post-inspection mechanisms 
are unlikely to be effective.  During the TIFA discussions in 
November 2007, Cambodia requested technical assistance for a draft 
Sub-decree on Border Measures detailing procedures at the borders 
allowing IPR owners to file an application with customs to suspend 
clearance of suspected counterfeit goods. 
 
¶H. Transparency of the Regulatory System 
 
¶57.  There is no pattern of discrimination against foreign investors 
in Cambodia through a regulatory regime.  Numerous issues of 
 
PHNOM PENH 00000318  008 OF 015 
 
 
transparency in the regulatory regime arise, however, from the lack 
of legislation and the weakness of key institutions.  Investors 
often complain that the decisions of Cambodian regulatory agencies 
are inconsistent, irrational, or corrupt. 
 
¶58.  The Cambodian government is still in the process of drafting 
laws and regulations that establish the framework for the market 
economy.  In addition to existing law and regulations, in 2007, the 
government adopted the Customs Law, Law on Water Resources 
Management, Law on Land Traffic, Law on Standards, Law on 
Insolvency, and Secured Transactions Law.  A commercial contract law 
and other important business-related laws such as commercial court, 
e-commerce, telecommunications, and personal property leasing laws 
are in draft or still pending promulgation. 
 
¶59.  Cambodia currently has no anti-monopoly or anti-trust statutes. 
 On a practical level, Cambodia has indicated a desire to discourage 
monopolistic trading arrangements. 
 
¶60.  Amendments to the tax system have brought substantial changes 
to the taxation regime applicable to businesses operating in 
Cambodia.  The tax system currently includes a profit tax (20%), 
excluding certain natural-resource development projects and 
including all QIPs registered with the CDC; a withholding tax 
(4-15%); a salary or personal income tax (5-20%); a value added tax 
(10%); various property taxes; registration taxes; and specific 
excise taxes on certain merchandise (rates vary).  There is a 
minimum turnover tax (1%).  Some foreign inputs are exempt from this 
levy, but have to pay a 1% advanced profits tax instead.  There are 
also import and export duties (rates vary).  The U.S. and Cambodia 
have not signed a Double Taxation Treaty. 
 
¶61.  Cambodia is currently working on the establishment of standards 
and other technical measures based on international practice, 
guidelines, and recommendations. Under the Law on Standards in 
Cambodia, passed in 2007, the Institute of Standards in Cambodia 
(ISC) was created within the Ministry of Industry, Mines, and Energy 
(MIME) as a central authority to develop and certify national 
standards for products, commodities, materials, services, and 
practices and operations.  When fully functional, the ISC will serve 
as the secretariat of the National Standards Council which will 
consist of representatives from various government ministries, 
state-controlled academic/research institutions, the private sector, 
and a consumer representative created to advise as well as approve 
standards. 
 
¶62. The responsibility for establishing industrial standards and 
certifications currently resides with the Department of Industrial 
Standards of Cambodia of MIME which will become part of the 
Institute of Standards of Cambodia in the future.  The Department 
has been assigned as the focal point for technical barriers to trade 
(TBT) and as the agency responsible for notifications and 
publications required by the WTO TBT Agreement.  The Ministry of 
Health is charged with prescribing standards, quality control, 
distribution and labeling requirement for medicines, but this 
responsibility will be brought under the ISC in the future. 
 
¶63.  Quality control of foodstuffs, plant and animal products is 
currently under the Department of Inspection and Fraud Repression 
(CamControl) of the Ministry of Commerce.  Cambodia is a member of 
the Codex Alimentarius Commission.  Currently CamControl creates 
standards for foodstuffs and is the national contact point for Codex 
Alimentarius.  Its primary responsibility is the enforcement of 
quality and safety of products and services relating to sanitary and 
phytosanitary (SPS) measures. 
 
¶64.  The Cambodian Constitution and the 1997 Labor Code provide for 
compliance with internationally recognized core labor standards. 
The law authorizes the Ministry of Labor and Vocational Training to 
set health, safety and other conditions for the workplace.  (Section 
N of this report discusses the labor situation in more detail.) 
 
¶65.  The National Bank of Cambodia supervises Cambodia's banks and 
financial institutions while the Ministry of Economy and Finance 
regulates the insurance industry.  The insurance market in Cambodia 
is relatively new, but has recently begun to gain credibility and 
expand its scope.  Currently, there are a few major insurance 
companies operating here such as Asia Insurance, the state-owned 
insurance company Caminco, Forte Insurance, and Infinity Insurance. 
 
¶66.  To stay competitive in the world market, the government 
introduced specific measures to facilitate business, in particular 
exports, by attempting to reduce informal costs and streamline 
bureaucratic hurdles.  Measures included: (1) introduction of a 
 
PHNOM PENH 00000318  009 OF 015 
 
 
joint inspection by CamControl and the Customs and Excise Department 
and issuance of a common inspection report valid for both agencies 
and "Federal Office" in order to reduce the amount of time spent 
applying for goods inspection; (2) based on this common report, MIME 
and the Ministry of Commerce will issue the Certificate of 
Processing (CP) and the Certificate of Origin (CO), respectively; 
(3) reduction of the costs of registration from $615 to $177 and of 
the time limit for Cambodian government issuance of registration 
from 30 days to ten and a half working days; and (4) reduction of 
time required to acquire documents related to CO and exports and for 
goods inspection. 
 
¶67.  Cambodia has renewed its commitment to creating a favorable 
environment for investment and trade.  During the TIFA discussions 
in November 2007, the government further committed to reducing 
unofficial fees and costs of imports and exports. 
 
¶I. Efficient Capital Markets and Portfolio Investment 
 
¶68.  Cambodia is moving to address the need for capital markets.  In 
November 2006, the National Assembly passed legislation to permit 
the government to issue bonds and use the capital to make up budget 
deficits.  The Budget Law for 2007 permits the government to issue 
bonds worth $250,000.  In 2007, the government also passed the Law 
on the Issuance and Trading of Non-government Securities, and, in 
partnership with the Korean Stock Exchange, plans to establish a 
stock market by the end of 2009. 
 
¶69.  The Cambodian government does not use regulation of capital 
markets to restrict foreign investment.  Domestic financing is 
difficult to obtain at competitive interest rates.  A new law 
addressing secured transactions, which includes a system for 
registering such secured interests, was promulgated in May 2007. 
Most loans are secured by real property mortgages or deposits of 
cash or other liquid assets, as provided for in the existing 
contract law and land law. 
 
¶70.  Export/import financing is available from multinational banks 
through a variety of credit instruments.  The U.S. Overseas Private 
Investment Corporation (OPIC), the International Finance Corporation 
(IFC), and the Multilateral Investment Guarantee Agency (MIGA) offer 
both investment guarantees and loans in Cambodia.  The Export-Import 
Bank of the United States does not operate in Cambodia. 
 
¶71.  The total assets of Cambodia's banking system as of August 2007 
were approximately 11,351 billion riel (approx. $2.8 billion), an 
increase of 66% from the same period of 2005.  Loans account for 
about 50% of the banking system's assets.  It is impossible to 
estimate the percentage of loans that are non-performing.  As of 
September 2007, credit granted by the commercial banks amounted to 
5,200 billion riel ($1.3 billion).  Loans made to services and the 
wholesale and retail sectors accounted for some 50% of total loans. 
 
¶72.  The banking sector has shown significant improvement, but 
requires continued progress to gain international confidence.  Under 
the amended Law on Banking and Financial Institutions, all of 
Cambodia's commercial banks had to reapply for licenses from the NBC 
and meet new, stricter capital and prudential requirements by the 
end of 2001.  As a result, there was a significant shakeout and 
consolidation within the banking sector with the closure and 
liquidation of 12 banks.  Since the shakeout, Cambodian banks have 
gradually increased in number with 17 commercial banks in operation 
as of December 2007.  As a supplement to commercial banking, seven 
specialized banks and dozens of microfinance institutions also offer 
financial services to the public.  In January 2008, Cambodia's banks 
were given their first-ever risk assessment from Standard & Poor's. 
Their placement was alongside that of banks in Venezuela, Bolivia, 
Ukraine, and Jamaica. 
 
¶J. Political Violence 
 
¶73.  Cambodia is relatively peaceful compared to its pre-UNTAC 
history.  Election-related violence has decreased in each national 
election held at five-year intervals since 1993.  The most recent 
commune council election held in April 2007 was generally peaceful. 
The next national election is scheduled for July 27, 2008. 
 
¶74.  Political tensions have eased, and the current situation is 
relatively stable.  However, Cambodian political activities have 
turned violent in the past, and the possibility for politically 
motivated violence remains.  In November 2000, an anti-government 
group based in the U.S. led an attack against government buildings 
in Phnom Penh.  During the anti-Thai riots in 2003, the Royal 
Embassy of Thailand and Thai-owned commercial establishments were 
 
PHNOM PENH 00000318  010 OF 015 
 
 
attacked.  More recently, in November 2006, police arrested six 
people for allegedly plotting to conduct bomb attacks in Phnom Penh 
during the Water Festival. 
 
¶75.  On July 29, 2007, three improvised explosive devices (IEDs) 
were planted at the Vietnam-Cambodia Friendship Monument in Phnom 
Penh.  One of the IEDs partially exploded, but the others failed to 
detonate and were recovered by Cambodian authorities.  No one was 
injured, primarily because the explosion occurred during the early 
morning hours.  Police subsequently arrested several individuals 
suspected of constructing the devices and planning the bombings. 
While there is no indication this attack was directed at U.S. or 
other Western interests, the possibility remains that further 
attacks could be carried out. 
 
¶K. Corruption 
 
¶76.  Despite increasing investor interest, Cambodia continues to 
rank poorly on global surveys of competitiveness and corruption. 
The World Economic Forum's 2007 competitiveness survey ranked 
Cambodia 110 out of 131 countries surveyed, similar to its 2006 
rating of 103 out of 125.  The World Bank also ranked Cambodia near 
the bottom of the list, 143 of 175, on business climate.  The 2007 
Transparency International Global Corruption Barometer ranked 
Cambodia second-worst in corruption with 72% of those surveyed 
reporting that they paid a bribe to receive a service in the 
previous 12 months. 
 
¶77.  Business people, both local and foreign, have identified 
corruption, particularly within the judiciary, as the single biggest 
deterrent to investment in Cambodia.  Corruption was cited by 80% of 
respondents to the World Economic Forum survey as the most 
problematic factor for doing business in Cambodia.  A 2007 
USAID-funded survey of the Phnom Penh Chamber of Commerce also found 
that corruption is considered to be the main obstacle for doing 
business. 
 
¶78.  Public sector salaries range from $20-60 per month for working 
level officials, and less than $800 per month for high-ranking 
officials.  Although there has been a recent salary increase of 15%, 
these wages are far below the level required to survive in Cambodia, 
and as a result, public employees are susceptible to corruption and 
conflicts of interest.  Local and foreign businesses report that 
they must often pay extra facilitation fees to expedite any business 
transaction.  Additionally, for those seeking to enter the Cambodian 
market, the process for awarding government contracts is not 
transparent and is subject to major irregularities. 
 
¶79.  Current Cambodian laws and regulations and their application 
are insufficient to address the problem of corruption.  Laws dating 
from the UNTAC period (1991-93) against embezzlement, extortion, and 
bribing public officials exist, but are enforced rarely, often for 
political reasons. 
 
¶80.  Cambodia is not a signatory to the OECD Anti-Bribery 
Convention, but has endorsed the ADB/OECD Anti-Corruption Action 
Plan for Asia and the Pacific.  In September 2007, the government 
also signed the UN Convention Against Corruption, and is considering 
joining the Extractive Industries Transparency Initiative governing 
the oil sector. 
 
¶81.  After a draft national anti-corruption law was sent to the 
National Assembly but not voted on in 1999, the Cambodian government 
undertook to revise the draft with cooperation from local and 
international NGOs, and international donors.  The draft, which is 
still pending, applies only to acts of corruption within Cambodia, 
and falls short of international standards due to limited 
independence of the proposed anti-corruption commission and weak 
declaration of assets provisions. 
 
¶82.  Cambodia is under increasing pressure from donors to address 
the issue of good governance in general, and corruption in 
particular.  In a draft action plan on good governance presented to 
donors in May 2000, Cambodia promised to pass anti-corruption 
legislation by late 2001. After missing the first deadline, the 
government again promised to pass anti-corruption legislation by 
July 2003.  In the December 2004 Consultative Group (CG) meeting of 
development assistance agencies, donors established a benchmark to 
have a new anti-corruption law submitted to the National Assembly 
before the next CG meeting, which was held March 2-3, 2006. 
Nevertheless, this deadline was not met and donors have become 
increasingly frustrated with the government's failure to act. 
 
¶83.  The Ministry of National Assembly-Senate Relations and 
 
PHNOM PENH 00000318  011 OF 015 
 
 
Inspectorate (MONASRI) has an anti-corruption mandate, but is 
largely inactive.  In 2007, however, MONASRI, with technical 
assistance from USAID, created a draft Access to Information Policy. 
 The draft has yet to be forwarded to the Council of Ministers.  The 
government also created an anti-corruption commission within the 
cabinet in late 1999, which has undertaken a few investigations, one 
of which resulted in the dismissal of a mid-level official in late 
¶2001.  Also in 2001, the government established a National Audit 
Authority, which has been ineffective because of its lack of 
independence and secrecy.  In 2007, the National Audit Authority 
conducted 39 audits of government institutions, projects, and 
companies doing projects with the government. 
 
¶84.  Ignoring the existing commission, the government established 
the Anti-Corruption Body (ACB) in August 2006, a temporary body 
designed to address corruption until the anti-corruption legislation 
is passed.  The mission of the ACB is to focus on preventing 
corruption, strengthening law enforcement, and obtaining public 
support for combating corruption.  The first investigation of ACB 
resulted in the arrest of five illegal car importers and 39 
officials; 10 mid-level officials have been removed from their 
positions.  Other investigations are underway.  However the ACB is 
considered to be ineffective because of its lack of independence and 
capacity. 
 
¶85.  In its most comprehensive reform strategy, the Rectangular 
Strategy adopted as the government platform in 2004, the Cambodian 
government once again renewed its commitment to fight corruption and 
make good governance the centerpiece of reform.  The strategy 
acknowledges the importance of taking action against corruption, but 
the challenge remains a daunting and long-term one that will require 
political will at the highest levels of the government. 
 
¶L. Bilateral Investment and Agreements 
 
¶86.  Cambodia has signed bilateral investment agreements with 
Australia, Austria, Burma, China, Croatia, Cuba, the Czech Republic, 
Egypt, Indonesia, Japan, France, Germany, Malaysia, the Netherlands, 
North Korea, the Organization of the Petroleum Exporting Countries 
(OPEC), Pakistan, the Philippines, Singapore, South Korea, 
Switzerland, Thailand, and Vietnam.  Future agreements with Algeria, 
Laos, Libya, Russia, the United Kingdom, and Ukraine are planned. 
The agreements provide reciprocal national treatment to investors, 
excluding benefits deriving from membership in future customs unions 
or free trade areas and agreements relating to taxation.  The 
agreements preclude expropriations except those that are undertaken 
for a lawful or public purpose, non-discriminatory, and accompanied 
by prompt, adequate and effective compensation at the fair market 
value of the property prior to expropriation.  They also guarantee 
repatriation of investments and provide for settlement of investment 
disputes via arbitration. 
 
¶87.  In addition, in July 2006, Cambodia signed a Trade and 
Investment Framework Agreement (TIFA) with the United States, which 
will promote greater trade and investment in both countries and 
provide a forum to address bilateral trade and investment issues. 
Two very successful meetings were held under the TIFA in 2007 in 
which the U.S. and Cambodian governments discussed WTO accession 
requirements, trade facilitation and economic development 
initiatives, and progress on intellectual property rights. 
 
¶M. OPIC and Other Investment Insurance Programs 
 
¶88.  Under the Quick Cover Program, the Overseas Private Investment 
Corporation (OPIC) offers financing and political risk insurance 
coverage for projects on an expedited basis.  Cambodia is eligible 
for this program.  OPIC currently provides assistance to a local 
bank for micro-financing projects, and may expand to 2-3 banks in 
the future.  With most investment contracts written in U.S. dollars, 
there is little exchange risk.  Even for riel-denominated 
transactions, there is only one exchange rate, which is fairly 
stable. 
 
¶89.  Cambodia is a member of the Multilateral Investment Guarantee 
Agency (MIGA) of the World Bank, which offers political-risk 
insurance to foreign investors. 
 
¶N. Labor 
 
¶90.  According to government statistics, the labor participation 
rate was 75 percent in 2005.  However, unemployment and 
underemployment are major problems which are not fully captured in 
government statistics.  The country has an economically active 
population (defined as being ten years of age and older) of some 7.8 
 
PHNOM PENH 00000318  012 OF 015 
 
 
million people out of a population of 14.1 million.  The Economic 
Institute of Cambodia estimated that the total labor force stood at 
8.4 million in 2007. 
 
¶91.  The economy is not able to generate enough jobs in the formal 
sector to handle the large number of entrants to the job market. 
This dilemma is likely to become more pronounced over the next 
decade.  Cambodia suffers from a large demographic imbalance. 
According to the 2004 Intercensal Population Survey (CIPS), persons 
20 years of age or younger account for 53 percent of the total 
population.  As a result, over the next decade at least 200,000 new 
job seekers will enter the labor market each year. 
 
¶92.  Approximately 73 percent of the labor force are engaged in 
subsistence agriculture.  About 350,000 people are employed in the 
garment sector while over 235,000 Cambodians work in the tourism 
sector. 
 
¶93.  In the 2005-2006 Global Competitiveness Report of the World 
Economic Forum, an inadequately educated workforce was identified as 
one of the most serious problems in doing business in Cambodia. 
Given the severe disruption to the Cambodian education system and 
loss of skilled Cambodians during the 1975-79 Khmer Rouge period, 
workers with higher education or specialized skills are few and in 
high demand.  A Cambodia Socio-Economic Survey conducted in 2004 
found that about 12 percent of the labor force has completed at 
least an elementary education.  Only 1.2 percent of the labor force 
completed post-secondary education. 
 
¶94.  Overall literacy, for those age fifteen and over, is 74 percent 
with male literacy rates considerably higher than those for females 
in both urban and rural areas.  Many adults and children enroll in 
supplementary educational programs, including English and computer 
training.  Employers report that Cambodian workers are eager to 
learn and, when trained, are excellent, hardworking employees. 
 
¶95.  Cambodia's 1997 labor code protects the right of association 
and the rights to organize and bargain collectively.  The code 
prohibits forced or compulsory labor, establishes 15 as the minimum 
allowable age for paid work, and 18 as the minimum age for anyone 
engaged in work that is hazardous, unhealthy or unsafe.  The statute 
also guarantees an eight-hour workday and 48-hour work week, and 
provides for time-and-a-half pay for overtime or work on the 
employee's day off.  The law gives the Ministry of Labor and 
Vocational Training (MOLVT) a legal mandate to set minimum wages 
after consultation with the tripartite Labor Advisory Committee.  In 
January 2007, the minimum wage for garment and footwear workers was 
officially set at $50 per month.  In April 2008, a temporary $6 per 
month cost of living allowance was instituted to offset high levels 
of inflation.  There is no minimum wage for any other industry.  To 
increase competitiveness of garment manufacturers, the labor code 
was amended in 2007 to establish a night shift wage of 130 percent 
of day time wages. 
 
¶96.  Cambodia does not currently have legislation governing worker 
health and safety, but there are various detailed ministerial 
regulations regarding payments in the event of on-the-job accidents. 
 In labor disputes in which workers complain of poor or unhealthy 
conditions, MOLVT and the Ministry of Commerce have ordered the 
employer to take corrective measures. 
 
¶97.  Enforcement of many aspects of the labor code is poor, albeit 
improving.  Labor disputes can be problematic and may involve 
workers simply demanding conditions to which they are legally 
entitled.  The U.S. Government, the ILO, and others are working 
closely with Cambodia to improve enforcement of the labor code and 
workers' rights in general.  The U.S.-Cambodia Bilateral Textile 
Agreement linked Cambodian compliance with internationally 
recognized core labor standards with the level of textile quota the 
U.S. granted to Cambodia.  While the quota regime ended on January 
1, 2005, a "Better Factories" program attempts to build on the labor 
standards established. 
 
¶98.  Cambodia has seen reasonably low inflation and high economic 
growth rates during the past few years, keeping inflation-driven 
wage increases in check.  However, inflation increased rapidly 
during the last quarter of 2007 and the first quarter of 2008, 
leading to demands for higher wages. 
 
¶O. Foreign Trade Zones 
 
¶99.  To facilitate the country's development, the Cambodian 
government has shown great interest in increasing exports via 
geographically defined special economic zones (SEZs), with the goal 
 
PHNOM PENH 00000318  013 OF 015 
 
 
of attracting much-needed foreign direct investment. 
 
¶100.  Cambodia has yet to pass the Law on Industrial Zones which 
will define SEZs and establish the rules under which they will 
operate.  The law is currently in draft form and awaiting approval 
from the National Assembly. 
 
¶101.  In late December 2005, the Council of Ministers passed a 
sub-decree on Establishment and Management of Special Economic Zones 
to speed up the creation of the zones.  The sub-decree details 
procedures, conditions and incentives for the investors in the 
zone. 
 
¶102.  Since issuing the sub-decree, the government has approved 11 
SEZs, located near the borders of Thailand and Vietnam, Phnom Penh, 
Kampot, and at Sihanoukville, and six others have obtained 
conditional licenses from the Cambodia Special Economic Zones Board 
(CSEZB) pending successful implementation of conditions of the 
license. 
 
¶P. Foreign Investment Statistics 
 
¶103.  Foreign Direct Investment (FDI) proposals approved by the 
Council for the Development of Cambodia (CDC) have dramatically 
increased in recent years, with approved FDI reaching $871 million 
during the first nine months of 2007, compared with $201 million in 
all of 2004.  FDI registered capital however, has been modest since 
1995, with an average inflow of $183 million in the period 
1995-2007.  The FDI registered capital figures probably understate 
actual investment, since they report only registered capital and not 
fixed assets.  CDC statistics for fixed assets, however, are based 
on projections, and the CDC has no effective monitoring mechanism to 
determine the veracity of the numbers.  The FDI registered capital 
flow into Cambodia is uneven and gradually declined from $135 
million in 1999 to $30 million in 2003.  In 2006, FDI increased to 
$209 million. 
 
¶104.  Total FDI registered capital flows into Cambodia for the years 
1995-2007 (October) are presented in the table below, in US$ 
million. (Source: CDC)  (Note: statistics from the National Bank of 
Cambodia and the Ministry of Commerce differ significantly from 
CDC's figures and from each other.) 
 
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
(Oct.) 
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- 
1,556 351  294  320  135  74   81   50   30   45   383 209 323 
 
¶105.  Figures from the CDC for registered capital of approved 
projects as of October 2007, including domestic investment, and 
broken down by country of origin and economic sector, are provided 
below.  The FDI registered capital figures below may overstate 
investment because they include projects that have not yet been, or 
may never be, fully implemented and retention of dormant or defunct 
projects from earlier years makes the investment figures appear 
higher. 
 
¶106.  Total cumulative registered investment projects approved, by 
country of origin, August 1994 to October 31, 2007.  (source: CDC) 
---------------------------------------- 
Country  US$ millions  pct. 
---------------------------------------- 
Malaysia  1,730  34.11 
Cambodia  1,340  26.42 
China      522   10.29 
Taiwan     386   7.61 
Singapore  181   3.57 
Thailand   162   3.19 
U.K.       127   2.50 
South Korea 141  2.78 
Hong Kong  117   2.31 
Canada      58   1.14 
Indonesia   54   1.06 
Australia   52   1.03 
USA         53   1.05 
France      37   0.73 
Japan       14   0.28 
Other       97   1.91 
---------------------------------------- 
Total      5071 
---------------------------------------- 
 
¶107.  Total cumulative registered investment capital by sector, from 
August 1994 to October 31, 2007 (source: CDC). 
 
PHNOM PENH 00000318  014 OF 015 
 
 
 
----------------------------------------- 
Sector   US$ millions  No. of Projects 
----------------------------------------- 
Industry    2,363   1,001 
 
- Food Processing  161    73 
- Garments         579    68 
- Petroleum        264    15 
- Wood Processing  255    40 
- Footwear          46    31 
 
Agriculture        188    97 
 
Services           486   115 
 
- Construction     161    21 
- Telecommunications 163  21 
 
Tourism          1,881    99 
----------------------------------------- 
Total           4,918   1312 
----------------------------------------- 
 
¶108.  New investment projects in US$ millions, by country of 
origin, 
1998-2007 (October) (source: CDC). 
 
--------------------------- ------------------------- 
Country  1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 (Oct.) 
--------------------------- -------------------------Malaysia 22.6 
17 1.6 28 na 3.6 7.8 10.6 2.5 15.3 
Cambodia 110 98 28 47 21 44 15 78.5 116.8 192.8 
USA  2.3 4.4 3.7 5.2 na na 2.1 2.2 4.3 1.5 
Taiwan 79 29 16 35.6 5 1 4.6 4.1 16.4 10.0 
Singapore 12 2.3 3.1 na 10 3.3 1.6 5.3 3.8 1 
China 75 36 3.9 4.2 8 14 24 38 28.3 31.1 
South Korea 4.0 na 10 2 7.6 1 4.1 16 4.5 17.29 
Hong Kong 48 22 4 0.7 1 1 na 0.3 1.5 0.6 
France 0.6 0.6 3 na na 1.7 0.6 0.4 na 0.3 
Thailand 53 16 17 3.1 na 3.1 2.0 15 10.0 0.8 
U.K.  0.4 1.5 6.5 1.5 0.4 0.5 1.5 1 1 1.5 
Canada   2.1 0.2 1 na 2.2 na 1.7 0.6 1.5 na 
Indonesia 10 0.4 3  na na na na na na na 
Australia 1.4 0.02 0.8 na na 0.6 na 7 na 2.5 
Japan  2 2.1 0.2 na 1.2 na 0.7 na 1 2.9 
Other  8.3 2.8 1.3 1.7 13.6 na na na 8.1 45.5 
----------------------------- -------------------- 
Total  430 233 103 129 69 74.3 66 379 209.7 323.1 
----------------------------- -------------------- 
 
¶109.  New investment projects in US$ millions, by sector, 1998-2007 
(October) 
--------------------------------------------- ------ 
Sector  1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 (Oct.) 
------------------------------ --------------------- 
Industry 298 101 48 61 22.5 41 53.5 325 173.4 218.4 
 
- Food  8.0 2.4 27 1.5 na 1.6 1 na 22 9.1 
 Processing 
- Garments 91.6 49.5 28 17 12.6 42 19 54 41.9 32.5 
- Petroleum 1 1 na na na na 1 200 na na 
- Wood  92 na na 1 1 1.3 1 na na na 
 Processing 
 
Agriculture 44 31.3 8.5 1 6.2 2.0 2.0 4.0 2.0 na 
 
Services 22.1 55 10 5.2 18 5.5 5 32 16.3 82.2 
 
- Construct 1.2 16.4 na na na na 3.0 31 6.0 na 
- Telecom 13.4 22 na na 2.9 10 na na na 42.2 
 
Tourism  67 45.5 36.5 61 22 26 5.5 18 18 22.5 
------------------------------- ----------------- 
Total  430 233 103 129 69 74 66 379 210 323 
------------------------------- ----------------- 
 
¶110.  The CDC has registered approximately $55 million in U.S. 
investment since August 1994.  Caltex has a chain of service 
stations and a petroleum holding facility in Sihanoukville; Crown 
Beverage Cans Cambodia Limited, a part of Crown Holdings Inc., 
produces aluminum cans; and Chevron is actively exploring offshore 
petroleum deposits.   In July 2007, General Electric opened a branch 
office, and in January 2008 Cargill opened a representative office. 
 
PHNOM PENH 00000318  015 OF 015 
 
 
There are also U.S. investors in a number of Cambodia's garment 
factories. 
 
¶111.  Major non-U.S. foreign investors include Asia Pacific 
Breweries (Singapore), Asia Insurance (Hong Kong), ANZ Bank 
(Australia), BHP Billiton (Australia), Oxiana (Australia), Infinity 
Financial Solutions (Malaysia), Total (France), Cambodia Airport 
Management Services (CAMS) (France), Samart Mobil Phone (Malaysia), 
Shinawatra Mobile Phone (Singapore), Thakral Cambodia Industries 
(Singapore), Petronas Cambodia (Malaysia), Charoeun Pokphand 
(Thailand), Siam Cement (Thailand), and Cambrew (Malaysia). 
 
¶112.  Some major local companies and their sectors are: Sokimex 
(petroleum, tourism, garment), Royal Group of Companies (mobile 
phone, telecommunication, banking, insurance), AZ Distribution 
(construction, telecommunication), Mong Rethy Groups (construction, 
agro-industry, rubber and oil palm plantation), KT Pacific Group 
(airport project, construction, tobacco, food and electronics 
distribution), Hero King (cigarettes, casinos and power), Anco 
Brothers (cigarettes, casinos and power), Canadia Bank (banking and 
real estate), Acleda Bank (microfinance), and Men Sarun Import and 
Export (agro-industry, rice and rubber export). 
 
¶113.  In January 2008, Acleda Bank announced it obtained permission 
to operate in Laos, and the bank has plans for further expansion 
into Vietnam and China.  Statistics on Cambodian investment overseas 
are not available, but such investments are likely minimal. 
 
MUSSOMELI